Negative growth intensifies in electrical equipment industry

Negative growth intensifies in electrical equipment industry
The electrical-equipment industry, for the second consecutive quarter in FY13, has seen a negative growth. Here is the in-depth analysis: how the industry has fared in 2012, compared to 2011
The Indian Electrical and Electronics Manufacturers’ Association (IEEMA)-the apex industry association of manufacturers of electrical, industrial electronics and allied equipment in India-released the Q2 FY13 performance of the $ 25-billion Indian electrical-equipment industry. The industry has seen a negative growth for the second consecutive quarter in FY13. It has witnessed a negative growth of 4.1 per cent compared to the sequential quarter of Q1 FY13 (2.1 per cent).Transformer, power cable, capacitor and switchgear industries-which represent 60 per cent of the growth of the industry-have witnessed a negative growth for the second consecutive quarter in FY13.
The transformer industry has seen a negative growth of 16.05 per cent against the negative growth of 7.6 per cent for the sequential period of Q1 FY13. The industry has witnessed this negative trend across power cable and capacitor, which registered a negative growth of 14.53 per cent and 38.2 per  cent respectively, compared to 12.9 per cent and 24.8 per cent negative growth in sequential quarter of Q1 FY13.
The switchgear industry, which was consistently growing till Q1 FY13, has witnessed a negative growth of 4.7 per cent in Q2 FY13 compared to positive growth of 2.37 per cent in Q1 FY13. Rotating machines segment has recovered slightly, witnessing a positive growth of 0.82 per cent in Q2 FY13 against a negative growth of 2.6 per cent in sequential quarter Q1 FY13. This is because of the revival in demand for HT motors and LT motors to some extent due to execution of long-pending orders from power generation and other core sectors.
“We have witnessed the second consecutive negative growth in FY13, and this is an alarming statistic for Indian electrical equipment industry,” J. G. Kulkarni, President, IEEMA, said. “An absence of a level-playing field in the country has made it difficult for domestic players to compete with overseas manufacturers; especially from China, which has emerged as a threat over the years. Imports of electrical equipment in the country have captured 43 per cent of the market valued at Rs. 1.75 lakh crore in 2011-12, whereas there is significant domestic overcapacity.
“The rise in cheap, unproven quality of imports is adversely impacting the growth trajectory of electrical equipment manufacturers and can have a negative impact on the nation’s economy. Industry needs immediate attention from policy makers to create a framework that offers an opportunity for domestic players to leverage on the anticipated growth in Indian power sector and also capture a greater share of the global market for electrical equipment.”
Imports continue to rise and give alarming signs to several sectors including insulator, motors, AC generators, LV switchgears and ACSR conductors which already have crossed more than 20 per cent of overall domestic industry size. Imports of power equipment under projects category have also increased by more than 25 per cent. Specifically, import of power transformers and reactors of 400 kV and 765 kV have increased to Rs. 332 crore from Rs. 115 crore, during first half of the last financial year. 
Sharp decline in power transformers, HT breakers and power cables delays the project/order finalisations because of precarious financial health of state utilities, SEBs coupled with uncertainty and credit crunch/high borrowing costs for private sector buyers. The buyers’ refusal to accept the order is leading to equipment stock-most are customised-pilling up. 

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